kaizen, lean production, just-in-time production

what is the purpose of business activity

to produce goods and services to satisfy customers needs and wants

what is production

the process of converting inputs such as land, labour, and capital into saleable goods

what is productivity

a measure of the efficiency of inputs used in the production process, especially labour and capital

how do you calculate labour productivity

total output/number of production workers

how do you increase efficiency

increase output with the same number of employees

how to increase productivity

improve staff motivation, replace people with machines, staff training

how do we increase efficiency

improve skill levels of workers, motivate workers, introduce better tech

why do businesses hold inventory?

if the business doesn’t have finished goods in stock the customers orders cannot be met efficiently, economies of scale

cons of holding inventory

warehouse payment, shrinkage costs

what is lean production

the production of goods and services with minimum waste

what are the aims of lean production

reduce waste, maintain/improve quality, getting rid of steps that don’t add value to the final product

benefits of lean production

reduces production costs, improved quality of products, increased efficiency

what is the main source of business waste

holding onto high levels of inventory

what is the “just in time” production method

raw materials and components arrive from suppliers just as they are needed by the production process

cons of just in time production

reliance on suppliers, risk of production stoppages, limited economies of scale

pros of just in time production

reduces the cost of holding inventory, flexibility, less risk of overstock

what is kaizen production

continuous improvement

cons of kaizen

constant effort, training costs, slow progress

pros of kaizen

increased product quality, increased efficiency